Elephant in the courtroom: Monetary Gold, the indispensable parties’ doctrine, and the ICJ’s ongoing litigation in Guyana v Venezuela

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In this post, Dr Alexander Orakhelashvili discusses the incidences of the the indispensable parties’ doctrine before the International Court of Justice, in the ongoing litigation between Guyana and Venezuela

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In 1954, the International Court of Justice issued a judgment in the case of Monetary Gold, in which it declined to exercise jurisdiction conferred to it, because to exercise it would lead to disposing gold which was Albania’s without the latter’s participation in and consent to jurisdiction over that case. The doctrine of “indispensable party” inaugurated then was raised in several cases, but the Court let it affect the outcome of a case only once, namely in East Timor (Portugal v Australia), in which it decided that ruling over Australia’s decision to conclude with Indonesia a treaty concerning exploitation of East Timor’s natural resources would amount to a ruling over the legality of Indonesia’s occupation of East Timor. The indispensable parties’ doctrine has also acquired a rather peculiar attractiveness from a practising lawyer’s point of view as a tool to hold their political masters or clients immune from litigation anywhere the judgment to be adopted in the relevant case draws some adverse implications on a State or entity not involved in the proceedings in question.

The nuances of fact and law arising across the Court’s case-law have not always been properly evaluated, or even noticed, in academic writings. More than a decade ago, I have explained why the Court’s expansion of the original doctrine of indispensable parties in East Timor has been flawed. In the first place, there is a cardinal decision between deciding on a non-party’s rights and interests and implied evaluation of the same rights and interests. The Monetary Gold case has related to in rem claims related to property and this is what made them subject-matter of the Court’s decision. The Court would have to directly decide on Albania’s right and property and it refused to do so. What the East Timor case witnessed was, therefore, an expansion (or better said distortion or disfiguration) of the original rationale of the indispensable parties’ doctrine. In East Timor, nothing relating to Indonesia would feature to the Court’s decision and its “rights or interests” could at most have featured in the Court’s reasoning without it making it to the Court’s actual decision.

In the second place, the above distinction is required to be made owing to the structural and systemic features of the ICJ Statute. The Statute declares in Article 59 that only the Court’s decisions are binding on parties (which requires distinguishing between what the Court says in its operative paragraphs of the judgment and reasons of the same as mentioned in Article 56 of the Statute). In Monetary Gold, the Court would have ended up rendering a judgment on Albania’s property in their absence, while in East Timor nothing of the sort was required: Indonesia’s rights and interests would not be mentioned in the operative paragraphs, and Indonesia would in no way be required to do anything, let alone be bound by the Court’s decision. This disfiguration of the original scope of the indispensable parties’ doctrine also explains why, as I have shown here and here, no other international tribunal has let the indispensable party doctrine affect the outcome of a case, even in cases involving factual constituents similar to East Timor. Hence, this doctrine has made no difference before ECtHR, ITLOS, ICC, and has also been rejected by the UK Supreme Court in Belhaj v Straw.

In Guyana v Venezuela, Venezuela has submitted to the Court that it cannot adjudicate upon the validity of 1899 Award between Venezuela and the UK (then in possession of Guyana’s territory), because the points raised about UK’s alleged fraudulent activities and fabrication of evidence in the course of those arbitral proceedings arguably make the UK an “indispensable party” on whose rights and interests the Court’s prospective judgment is bound to have an impact. Venezuela contends that the Court’s guidance on indispensable parties is clear but it also evades the distinctions observable across the Court’s case-law as well as constitutional distinctions to be drawn on the basis of the Court’s Statute (discussed above).

Guyana suggests that “first, the United Kingdom has no legal interests – no legal rights or obligations – that would be affected by a judgment of the Court on the merits of this case; and second, the United Kingdom has given its consent, in Article IV of the 1966 Geneva Agreement, for the Court to resolve this dispute between Guyana and Venezuela.” However, if the UK has no legal interests in this matter now and at this present stage, and it validly had them at the earlier stages, in and around 1899, then the indispensable parties’ doctrine is not a real issue because here, because before Guyana’s independence, any putative litigation to annul 1899 Award would have been be between Venezuela and the UK (not Guyana). However, as the UK is not part to these current proceedings, and if the indispensable parties’ doctrine applies the way Venezuela’s legal team see it, then any judicial pronouncement on UK’s alleged past conduct of should be enough for the Court to decline to exercise its jurisdiction. On this account, what matters is not as much the factual presence of current will or interest of the UK in the subject-matter of this adjudication, but the UK’s alleged past involvement of with the original arbitral proceedings. It is in this respect that Guyana’s legal position contains a significant gap. So much so that, were their claims relating to 1966 Treaty to fail, Guyana would be left with empty hands and entirely unprotected against Venezuela’s preliminary objections. This is the outcome of Guyana’s failure to challenge Venezuela’s interpretation of the indispensable parties’ doctrine, notably the latter’s reliance on the expanded or disfigured version of that doctrine as the Court endorsed it in East Timor. Instead, Guyana makes a submission that could be interpreted as an implied acceptance of Venezuela’s position (here at para 12). Adopting such line of argument could be a defensible choice of litigation strategy in some circumstances, or a self-harming concession in other circumstances, similar to what Italy did to itself in the Jurisdictional Immunities case when it conceded that war crimes were sovereign activities and State immunity was a requirement under customary international law.

Overall, Guyana’s position relies too much on facts and not sufficiently on applicable standards. One of Guyana’s counsels suggests that Venezuela is “unable to identify any British interests that would be affected by the Court’s judgment on the validity of the Award” (here, para. 37 and see also Guyana’s written observations, paras 19-20). The counsel does say, though, that “It is for Venezuela, in justifying its preliminary objections, to identify, specifically, what the consequences would be for Britain’s legal interests if the Court were to invalidate the Arbitral Award on the basis of its alleged unlawful conduct during the 1899 arbitral proceedings.” But a glimmer of hope raised by the counsel’s above remark gets dashed by the comment made by Guyana’s another counsel, to the effect that “It will not be sufficient to argue that a British lawyer perhaps expressed a desire to communicate with an arbitrator, or actually sought such communication. Venezuela’s burden is to prove that one or more of the arbitrators engaged in inappropriate contact with counsel, and this is what influenced the Award.” However, is that not precisely what would prove misconduct on the British side as well, indeed qualifying such putative conduct as a prime example to fit within the indispensable parties doctrine the way Venezuela presents it?

Overall, while Venezuela is doing its best to persuade the Court in the solid character of the indispensable parties doctrine whose all elements are carved in stone, Guyana does little to show why that argument is flawed. Gaps and holes are present in pleadings of both litigating parties. The overall impression one gets from all this is that the litigating parties have either overlooked, or been too overcautious to address, certain intricacies of the indispensable party doctrine, and in some important respects they have in effect spoken past each other and left unaddressed important points of construction and proper scope of indispensable party doctrine the way that creates litigation risks to both of them. This may have an effect of increasing the Court’s wriggle room when deciding on this matter, namely their choice whether to prioritise facts, context or applicable standards when making their decision. Practising lawyers may choose and pursue litigation strategies, but applicable standards remain what they are, and risks arising from addressing them incompletely do not go away.

As for the Court itself, the choice would be between sticking to the East Timor disfiguration of the indispensable parties’ doctrine and not being the only court or tribunal that subscribes to that disfiguration. It remains to be seen what the Court will choose.

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